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The Fairy Tales of Low Online Prices

Author Kurt Schauer

Are prices really always cheaper when buying any kind of goods online? Not necessarily, according to a study conducted worldwide and funded by MIT in Cambridge. When shopping through multi-channel retailers, there are only minor differences between offline and online prices, especially in Germany - which is good news for the end customer. Nevertheless, it is still worth comparing prices, because one important component was not taken into account in the study.

data collection …

In order to make a study meaningful, large amounts of data are necessary. This is undoubtedly what happened in this case:

The study was conducted over a period of 16 months and included ten countries spread across the world, including the UK and Germany in Europe.
38.000 prices of 24.000 different products were compared. Collecting this amount of data alone was not possible, which is why 370 freelancers had to help.
Only multi-channel retailers were compared. This means companies that sell both online and offline (such as Saturn or Tchibo, for example). The comparison also required the installation of a special app.

These employees were instructed to go into a store with their smartphones and scan up to 50 products using the barcodes. For later comparison, it was necessary to write down the advertised price. Obviously not every retailer was happy with this, and in China, for example, it was difficult to even take photos of products. Nevertheless, the study is considered to be meaningful due to the huge amount of data - and it reveals some surprises.

… and their evaluation

In the end, it turned out that in 72% of cases the prices were identical down to the last cent. In the remaining 28%, the differences were only a few percent, meaning that for prices in the two- to three-digit range, the customer often only saves a few cents to a few euros by using the cheaper method. The effort of comparing prices is therefore not necessary if you already know which retailer you want to buy a certain product from. The right place is simply the one that can be reached more quickly and with less effort.

In this comparison, Germany is even doing a little better than average, as prices are the same in 74% of cases. If there are differences in the remaining 26% of cases, buying online is almost always cheaper. You can then save up to 8% of the costs, which can be worthwhile for individual items worth several hundred euros. The study also found that buying offline was cheaper - but only as a rare exception, which proves the rule.

The product group decides

Buyers who buy products from global corporations have a particularly high chance of success - in other words, identical prices. Prices from large IT companies such as Microsoft and Apple or from companies such as Ikea are almost always identical within a currency area (although there can still be major differences across countries). For residents of countries in the Eurozone in particular, the place of purchase plays almost no role.

The exact type of goods is therefore more important: high-priced items such as electronic devices or clothing are priced at the same level both in the store and in the online shop. The differences are much more extensive when it comes to food, for example: the numerous offers on site (due to an approaching expiration date for fruit and vegetables, for example) mean that only around 50% of the prices are the same. Furthermore, this area is constantly subject to strong price fluctuations, which is why a comparison between online and offline prices rarely produces a reliable result for the customer.

A very popular tactic of multi-channel retailers now seems to be far less common than it was a few years ago: adjusting prices to the customer's location, search behavior and economic status. Depending on the postcode, slightly higher prices were charged in the past, for example, if the search for a specific product came from a device in a wealthy part of town. However, the study was unable to prove this practice, at least in the USA. The greater transparency provided by price search engines and the associated fear of customer complaints are blamed for this.

The great unknown: pure online retailers

However, the prices of typical online shops such as Amazon or eBay were not included in this study. The study should therefore not lead customers to believe that price comparisons are generally a waste of time. Due to many savings (maintaining a branch network, personnel costs, building costs), online retailers often sell their goods more cheaply than the multi-channel chains mentioned. As already mentioned, online prices are almost always cheaper than offline prices (assuming there is a price difference at all), price comparisons will continue to be a proven way to save money in the future - if more than just multi-channel retailers are included in the comparison.

If you are looking for ways to make your online shop more attractive - beyond simple price reductions, the kaos advertising agency will of course be happy to help you. Our expertise also includes acquiring customers by optimizing your online shop - just contact us without obligation!